Obama’s Economic Speech

We deconstruct "shovel ready," "up to" and other misleading phrases.

Summary

We’re always alert for signs that the president (any president) is overselling his programs. Here’s what we heard in President Obama’s speech on Tuesday announcing new efforts to create jobs:

He highlighted a Congressional Budget Office estimate that "up to" 1.6 million jobs resulted from stimulus spending, but was silent about CBO’s estimate that the total could be as small as 600,000.

He said stimulus spending was "only a very small part" of the deficit. CBO has put it at $190 billion of last year’s $1.4 trillion shortfall.

He said 10,000 infrastructure projects have been "funded," which is true. But relatively little has actually been spent for projects supposedly deemed "shovel ready" eight months ago.

Obama slightly exaggerated the average number of jobs lost from December through March.

Analysis

The president gave his economic address Tuesday morning at the Brookings Institution in Washington, D.C. His remarks were televised live on some cable networks.

Weasel Words

We listen for qualifiers that suck the meaning out of a phrase, qualifiers like "up to" and "as many as" when speaking of numbers. Think of those stores that advertise savings of "up to" 50 percent. The president used that same technique when he claimed that "up to" 1.6 million jobs had been created or saved by the stimulus spending, "according to the Congressional Budget Office."

Obama: [W]e learned on Friday that the unemployment rate fell slightly last month. This is welcome news, and news made possible in part by the up to 1.6 million jobs that the Recovery Act has already created and saved according to the Congressional Budget Office.

At one point Obama said the Troubled Assets Relief Program (TARP) had "indisputably helped prevent a collapse of the entire financial system." It may be indisputable that TARP helped to some degree, but the degree of help, and whether TARP worked as promised, are disputed hotly in some quarters. "Yes, it saved some banks from going under," says Jerry O’Driscoll, a former vice president of the Dallas Federal Reserve and a senior fellow at the Cato Institute, as quoted in a recent Newsweek article, "but did it restore the health of the banking system? Absolutely not."

"A Very Small Part?"

Obama stretched the facts when he said that the American Recovery and Reinvestment Act is "only a very small part" of the current deficit.

Obama: Despite what some have claimed, the cost of the Recovery Act is only a very small part of our current budget imbalance. In reality, the deficit had been building dramatically over the previous eight years. We have a structural gap between the money going out and the money coming in.

Folks passed tax cuts and expansive entitlement programs without paying for any of it — even as health care costs kept rising, year after year. As a result, the deficit had reached $1.3 trillion when we walked into the White House.

Obama said 10,000 infrastructure projects — the ones we were once told were "shovel ready" — have been "funded."

Obama: Already, more than 10,000 of these [infrastructure] projects have been funded through the Recovery Act. And by design, Recovery Act work on roads, bridges, water systems, Superfund sites, broadband networks, and clean energy projects will all be ramping up in the months ahead.

Obama, Dec. 2008: We’ve got shovel-ready projects all across the country. And governors and mayors are pleading to fund it. The minute we can get those investments to the state level, jobs are going to be created.

But that was then. Now the president has dropped that sort of "shovel ready" talk. A few days ago he said at a White House "jobs summit":

Obama, Dec. 3 2009: The term ‘shovel-ready’ — let’s be honest, it doesn’t always live up to its billing.

Instead, in his speech Tuesday the president spun the relatively slow pace of infrastructure job creation as a positive thing.

Obama: [W]e’re going to see even more work – and workers – on Recovery projects in the next six months than we saw in the last six months.

That’s what old-timers used to call "making a silk purse out of a sow’s ear."

A March Too Far

The president was on target — mostly — when reminding listeners what an awful economy he inherited:

Obama: Our gross domestic product — the sum total of all that our economy produces — fell at the fastest rate in a quarter century. … We were losing an average of 700,000 jobs each month, equivalent to the population of the state of Vermont. That was true in December, January, February, March.

The first part is true and may even be an understatement. Bloomberg News reported April 29 that the economy had just posted "the weakest six months since 1957-58," which is more than 50 years ago, not just 25.

But the president ad-libbed one month too many. By including March in his list of months (which was not in his prepared remarks), his statement was a bit off. Job loss in March was 652,000, pulling down the four-month average to 689,000. He would have been accurate if he had left March out, or just said the average was "nearly" 700,000 per month.

— by Brooks Jackson, with Joe Miller and Jess Henig

Correction, Dec. 11: In the section of this story titled "A Very Small Part?", we used the wrong figure when we wrote that the Congressional Budget Office predicted the American Recovery and Reinvestment Act would increase the deficit. The correct number is $185 billion (later amended to $190 billion), not $400 billion as we wrote. Our original figure included $150 billion for the Troubled Asset Relief Program and reduced tax revenues. We regret the error and have corrected the story.

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